2015 April

1. Allows you to borrow money. If you have a credit (good) history, then you can borrow money for a car loan or mortgage for a house. If you borrow money, pay it by the due date. Or you will decrease your credit score/rating.

2. Determines loan amount and interest rate. The better your credit score the more you can borrow (good and bad) and the lower your interest rate.

Here’s how:

1.Pay your bills on-time. Any bills your have (e.g., phone or electricity), pay them early or by the due date.

2. Obtain at least 1 credit card. Perhaps, apply for a credit card at store you frequent such as Target. Only make minimal purchases in order to easily make on-time payments without paying late fees (interest rates). This allows you to build your credit history. I’m not telling you to go out today and get a credit card. You have to consider your personal financial situation.

If you don’t pay your bills or credit card in a timely manner, then you will negatively effect your credit rating. Late payments account for 35% of your credit score. See below for additional percentages account for your credit score:

What is a credit score anyway?

So, you may read or hear the words…credit report, score, or FICO (Fair Isaac Corporation) score. Your credit score is based on your credit history, such as how much money you owe (30%), how long you’ve owed it (15%), how many new accounts you have (10%), how often you miss or are late with payments (35%), and what type of credit accounts you have (10%). Changes in any of those factors will cause your score to go up or down.

You can obtain a free annual report. Oftentimes, it’s a good idea to check to ensure identity theft or fraudulent charges have not been acquired in your name. Equifax, Transunion, and Experian are different credit agencies to check your credit score.

You have $20 in your wallet. Do you spend the last of your cash on something you want or save it? Probably, spend it. If you didn’t have $20 in your wallet, would you use a credit card to pay for it? May be not. It is so much easier to spend the cash burning in your wallet. However, a credit card may be just as easy, but it comes with payments and possible interest charges. Here are a few things to consider before spending your last stash of cash or whipping out the credit card in your wallet:

1. Be intentional. Ask yourself – Do I really need what I am purchasing? The little purchases add up to a large sum. What is the investment? Will this purchase last long term? Think before you spend your cash.

2. Think long-term gain. Is the purchase only a short-term gain? Immediate gratification. If you saved the cash, what will you be able to purchase in the future? It is easy to follow your impulse to gratify your “need” than to think long-term. However, it will pay off. Stay focused on your goal.

3. Create a “Needs & Wants” list. This will help keep your focus on items you truly need versus those that you want (i.e., would like to have). You can begin to save for the items you want on your list. If you want to take a vacation, then label an envelope with “VACATION” on it. When you have the urge to spend money on a short-term gain, then put that money into the envelope. You’ll be surprised at how much will save for that vacation you want to take – a long-term gain.

Student loans are an important factor to consider when creating and managing a budget. Knowledge is power. Find out how much you owe (and the monthly payment), when you need to start repaying the loans, and what options you have for repayment (e.g. IBR – Income Based Repayment).

Here are 5 steps to take when entering student loan repayment:

Step 1: Student Award History Report. Stop by the Student Financial Aid office located in Room 4 of Reynolda Hall and request a copy of your Student Award History Report from the front desk counselor. This report details each grant, scholarship, work-study, and loan awarded to you while at Wake Forest. The report also includes contact information for Federal Stafford and Perkins loans, WFU administered student loans like the Denmark, Wallace, and Hutchins loans, and the Need-Based Private loan. If you have any questions about your award history, you can schedule an appointment with a financial aid counselor.

Step 2: Log into NSLDS*.The National Student Loan Data System, is the Department of Education’s central database for student aid. NSLDS receives data from schools, guarantee agencies, the Direct Loan program, and the Department of ED programs. NSLDS Student Access provides a centralized, integrated view of Title IV loans and grants so that recipients of Title IV federal aid can access and inquire about their Title IV loans and/or grant data. This site will provide information on your federal loan balance, loan interest rates, and loan grace periods (grace periods vary from 1, 6, or 9 months after graduation depending on the loan).

Step 4: Understand Repayment Options: There are a myriad of repayment options available to federal student loan borrowers. This Federal Student Aid site on repayment gives a comprehensive breakdown of federal repayment plans as well as a good estimator to help calculate what your monthly repayments would be under different plans. If you’re interested in loan consolidation to take advantage of certain income based repayment plans or Public Service Loan Forgiveness, visit the Federal Direct Loan Consolidation site.

Step 5: Communicate with your loan servicer. If you have a problem making your payments, do not ignore the problem. One of the biggest mistakes a student can make is not addressing repayment head on. Federal student loans are flexible and there may be financial hardship programs that can help a student get through a rough patch. Ignoring mail or emails from your loan servicer is a recipe for disaster. The Student Financial Aid office can assist students with repayment questions after the student graduates. If you’re more comfortable speaking with a financial aid counselor you worked with while at Wake, reach out to the counselor with your questions.

*The National Student Loan Data System (NSLDS) is the U.S. Department of Education’s (ED’s) central database for student aid. NSLDS receives data from schools, guaranty agencies, the Direct Loan program, and other Department of ED programs. NSLDS Student Access provides a centralized, integrated view of Title IV loans and grants so that recipients of Title IV Aid can access and inquire about their Title IV loans and/or grant data.

Once you track your spending habits, you’ll be prepared to create a budget. Also, it provides clarity on your needs versus your wants. It is important to distinguish the two categories. Needs are rent, meals, and electricity (e.g. utilities). Wants are luxuries such as lunch at Chipotle. Are you spending too much on the wants or got-to-haves?

Whether living at home or on your own, a budget will help you stay on track. First, you need to know your monthly net income (amount received after taxes and deductions), scholarship or stipend amount. Second, think about your expected monthly expenses. For example, rent…This is a fixed expense; it doesn’t vary from month to month. Some expenses fluctuate, like groceries. These are called variable expenses. Third, research areas where you can spend less such as having a roommate to share the cost of rent, and taking your lunch to work as opposed to eating out. Buying lunch everyday can quickly add up, so can a Starbucks latte in the morning.

Here are 4 budgeting resources to help you stay on track:

1. CashCourse—A free online financial resource for Wake Forest students. Learn to manage money and financial literacy through a variety of fun interactive tools such as videos, calculators, and worksheets. Manage your budget using the budget wizard by tracking your expenses. The information will help you make informed financial decisions throughout your college years and into your professional life. Available when you want to manage your money!

2. Mint—See all your balances and transactions together, on the web or your phone. Mint automatically pulls all your financial information into one place, so you can finally get the entire picture. Mint automatically updates and categorizes your information, and suggests ways to help you save. Mint sends automatic alerts—like bill reminders—to your mobile phone or email. Set a budget and create a plan to reach your personal financial goals. You can track your progress online or stay up-to-date with monthly emails.

4. Hands on Banking—Access free online financial courses that are self-paced with information and tools, such as calculators, glossary, worksheets, money management tips, and helpful links. The program provides the essentials of financial education, real-world skills, and knowledge through interactive lessons based on age appropriate groups.

Tracking your spending habits may seem like a daunting task. However, it is the first step in knowing where and how much you are spending daily, weekly and monthly. I challenge you to experiment for a week. You will be surprised on what and how much you spend your money. It is important to track every purchase even the small ones such as a pack of gum.

Here are 3 simple steps to follow:

1.Save it. Keep your receipts. They will help you remember what you purchased from day to day. They will be useful references when tracking your purchases. Place the receipts into a folder, envelope or shoebox.

2.Track it. Write down your purchases in a journal or log. Do not include your fixed expenses such as rent. If you prefer, input your expenses into a spreadsheet or online worksheet. Try Wells Fargo’s My Money Journal as a guide. Create your own using Excel.

3.Calculate it. You want to review what you have spent each day. It is important to calculate your expenses. Total your expenditures at the end of each day and week for a 7-day total.

Are you fiscally fit? Do you know how much money you spend each week or month? Are you aware of your budget? Do you have a budget? How are you going to repay student loans?

It is wise to start thinking about tracking spending, creating a budget, and preparing for student loan repayment now. You may be surprised by how you easily could save or pay off debt with the money you’re spending.

Be frugal. It doesn’t mean you have to be tight with your money. Be intentional with your spending. Do you really need that Venti Cinnamon Dolce Latte (my favorite) from Starbucks? Probably not.

Be creative. Can you recreate your favorite coffees or teas at home for a fraction of the cost? You will save approximately 80% of your money. Instead of spending >$5.00 for a beverage, save $4 and spend only $1. Small purchases add up to a lot saved.

Experiment for a week. Track everything you purchase. Yes, even write down the pack of gum bought at the convenience store. You will find that you may be spending money freely without giving it much thought. Once you start tracking, you’ll notice a shift in how you make decisions on purchases. You will start asking yourself, “Do I really need that pack of gum?”

Don’t know where to start? Luckily, WFU offers CashCourse, a free and unbiased real‐life money guide. Get started now, register for a free account. Plus, participate in the weekly finacial literacy quizzes to test your knowledge and a chance to win “lunch on us” with a Chipotle gift card! At the end of april you will be entered to win a $25 VISA gift card.

How to participate:

1. Register at http://www.cashcourse.org/.

2. Participate in the quiz of the week. Quizzes are located at the bottom of the home page under Resources. Quiz schedule:

April 6-12: What’s Your Budgeting IQ?

April 13-19: Test Your Student Loan IQ

April 20-26: Save or Splurge?

April 27-May 5: What’s Your Credit Score IQ?

Here’s what you get with CashCourse:

A Budget Wizard to build your own monthly budget with your real income and expenses

Videos offering quick lessons on financial basics

Calculators to help you demystify your debt or set a savings goal

Worksheets to help you organize your life, build a budget, and master your student aid

Articles on real issues you’re dealing with now, as well as topics to prepare for your future

A Financial Experts Wall, where you can submit questions to CashCourse experts

Quizzes and courses to test what you know and show you where to go for more information

Want more? Follow the blog for tips on how to become more fiscally fit and build your financial muscle.